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Thursday, August 25, 2016

Economics of the Election

== Ah the ‘flat tax’ ==

Two catechisms of the American right? The bizarre notion of a “flat tax” on incomes and idolization of Russian President Putin – who happens to have instituted a flat 13% income tax a decade ago. And how’s that working out? (Note if Gary Johnson gets on the debates, you’ll hear him convey love of a flat tax… proof that 50% of the libertarian movement’s message is lunacy paid-for by Steve Forbes and the Koch brothers. The other half? Actually, kinda interesting stuff and vastly more so than the loony GOP.)

One can understand the right’s bromance with Vladimir Putin on many levels, but one that’s seldom mentioned is the steady re-emergence of the Communist Party in Russia, as millions recall that they felt both powerful and equal once, across the last thousand years, and it was not under the current oligarchs. Ah but this article shows the CP’s slog will include overcoming a top echelon that is loyal to… guess who? “With the 100th anniversary of the 1917 Bolshevik Revolution looming, Russia’s Communists are confident that history is on their side.”

This article offers up a chilling way in which the GOP has been consistent, at least: “Over the course of the last year, as Trump positioned himself as the frontrunner for the GOP nomination, there’s been no shortage of Republicans who’ve asked, in panicked tones, how their party and its voters could embrace someone so ignorant and dangerously unprepared for national office. And yet, many of these same Republicans, just two presidential election cycles ago, were prepared to put Sarah Palin one heartbeat from the Oval Office.”

See some of her recent remarks and remember… this lobotomized mess is what the party of Lincoln, Teddy Roosevelt and Barry Goldwater has come to. If they were alive today, those three would join forces to drive a stake into the heart of the undead zombie elephant that is shaming their memories.

Why has the U.S. economy performed better under Democratic than Republican presidents, “almost regardless of how one measures performance”?This Evonomics article by Steve Roth - Economists Agree: Democratic Presidents are Better at Making Us Rich. Eight Reasons Why - probes the blatant difference, that even top GOP think tanks admit to be flat-out fact.When they attribute it to “luck” they ignore the scores of other metrics that also do better across democratic administrations…

.. such as rates of entrepreneurship and small business startups, military readiness, U.S. military casualty rates, terrorist attacks and the rate of change of deficits. All of these conservative desiderata do dramatically better across democratic administrations, which should attractparty-switching by those who are sincere. (It should not have taken Trump!)

Roth explores likely explanations, several of which boil down to the same thing — that the Republican Party’s controlling oligarchy simply does not care about outcomes-based governance or long term metrics of national health.Their executive and legislative branches have shown interest only in impulsive self-interest, using specialists to concoct incantations — like “WMDs” and “Supply Side Economics” — to justify what amounted to raids upon the commonwealth.

The fact that the Congressional GOP leaders - Dennis Hastert, Tom DeLay, John Boehner, Mitch McConnell, Paul Ryan - have shown no interest in adapting laws to fit 21st Century changing circumstances, blocking even minimal legislation that does not benefit the clade, is entirely consistent. To be clear, GOP Congresses in this century have been the laziest in the history of the republic.

But read Roth’s article.It’s a bit partisan, but offers possible explanations for a flat-out fact.That no one who looks at history or evidence should trust the Republican Party with governance over even a local pest control district.==Will we see an oil crash? ==

I have seen very few “economics” articles more blatantly stupid than this one on Yahoo Business by Mr. Sam Ro, who asserts that low oil prices hurt everyone, not just petroleum producing nations.As they even-out on a low plateau, “importing countries will lose their one-time windfall from falling prices,” Ro quotes High Frequency Economics’ Carl Weinberg. At first I thought both the quoter and quotee might be shill-propagandists for a petro house.Or possibly insane, Then I realized… it’s much worse.They might be sincere. They are actually capable of ignoring the fact that low oil and especially natural gas prices have been luring investment in manufacturing in the United States. Those manufacturers and everyone from railroads to airlines to consumers are delighted to have energy prices stay nice and low and flat for the extended future.The oil price plummet could have been a disaster to the planet, had it happened a year or two earlier, undercutting the rise of sustainables. But now even solar and wind power producers are fine with it, since they have reached breakeven with fossils and their ongoing, spectacular takeoff will benefit from low manufacturing overhead.Are Ro and Weinberg shills then?Or dumb? Or is something else at work? Chillingly, there is. The mindset of “Margin Parasites.” Brokers who do best when markets gyrate and swing, giving their kind of leech a chance to grab nibbles with every fluctuation.And they rave a 50 year excuse that they do a “service” by helping to “discover true prices.” A mystical chant that has no bearing on actual economics.Parasites who actually convince themselves that sucking from the arteries of manufacturers and commodities users (who suffer when they scurry to adapt to rapid swings) is a gooood thing. Value extractors who turned “finance” into a lamprey industry, weakening all the makers and do-ers and innovators and hard workers. Seriously I take it back. This is insanity. Alas, it is an insanity that controls much of our economy and is trying to become our feudal lords.== Mistrust of Science ==

I confront folks on the US right with a simple fact: that their once-intellectual, but now lobotomized cult is in full tilt war against science. And not just science! Name one profession of high knowledge and skill that’s not under attack by Fox & its cohorts? Teachers, medical doctors, journalists, civil servants, law professionals, economists, skilled labor, professors… oh, yes and science.

They never even try to name one exception! Instead, they almost always blather something like (recently): "I'm amaze at how often the experts are wrong yet people are willing to call them experts." (sic)

OK then. Let's start by admitting a truth... that *not all smart people who know stuff are wise.*

We all know that's true. We've all known smart people who know stuff who weren't all that wise.

But that truism has been mutated by propaganda into something quite different, the Fox-confederate incantation that: "ALL smart folks who know stuff are therefore - automatically and naturally - far less wise than people who are dumb and don't know stuff."

It's a propaganda stretch that should never have worked... but it has! In fact it is the central confederate catechism - their core article of faith. They HAVE to swear allegiance to that mantra! Because all the smart people who know stuff are fleeing the gone-mad American right as fast as they can run.

Including those who are conservative by nature, or capitalists or libertarians. All of them! Oh, you might fish for a few Koch-paid denialist cultists or Young Earthers with PhDs. Okay and Doctors of Divinity and hedge fund managers. But it will just make you look ridiculous.

Let's reiterate: This is what these guys now rant and rave. They are NOT saying "not all smart people who know stuff are wise."

They are raving "ALL smart folks who know stuff are therefore - automatically and naturally - far less wise that people who are dumb and don't know stuff."

There is no squirming out of this. That's the core belief.--== addenda ==Oh, just because today's mad right CONSISTS of that message, don't think I am unaware that the far-far left CONTAINS some people like that. I am wary in that direction, too.

But I know which cult threatens my planet and children and nation, right now.Followup: In 1974, conservatives with college degrees had the highest level of trust in science and the scientific community. Today, they have the lowest. And scientific folks have noticed where they are unwelcome. Thirty years ago, 40% of US scientists called themselves Republican, now it is 5% and plummeting. They are voting with their feet, the smartest, wisest, most logical and by far the most competitive humans our species ever produced.

64 comments:

David, your first paragraph in the main post implies that Gary Johnson advocates a flat income tax. I have never heard him advocate a flat income tax, but perhaps you have some inside information that I don't.

Also, your implication that Gary Johnson is somehow connected to the Koch brothers is based on pretty flimsy evidence, especially when Gary Johnson keeps jumping away from the official Libertarian Party platform with positions such as advocating mandatory vaccination and advocating a carbon tax.

I've seen you making comments like claiming that conservatives think "ALL smart folks who know stuff are therefore - automatically and naturally - far less wise than people who are dumb and don't know stuff" and it bothered me, and just now it occurred to me WHY.

I've worked with lots of working class people in lots of fields, and most of them ARE experts - they're just experts in fields that you have no idea exist. There may not be prestigious schools to attend to gain their knowledge, but they still have an impressive body of knowledge.

Most of all, they can see what's in front of them, and when it doesn't match what the "experts" tell them it is, they know it. Sure, sometimes it's just miscommunication, but just as often it's not.

Sure, some of them aren't so bright, but we all know that's pretty common in academia too. Enough of them are bright enough.

Maybe instead of lambasting them you should try to communicate with them.

"In a way you're right. He's everything we don't like about America--nativism, bigotry, boastfulness, hubris, ignorance--in a word, the Ugly American--writ large. All our weaknesses and shame, proudly displayed. IMHO."

Nah, it's called brash, bold confidence, ambition, practicality, patriotism, competitiveness, living larger than life, giving the finger to convention, political correctness and dandyism, and a willingness to hustle. It's the American Way, and it's what makes America great. You geeks are trying to make America into something it ain't, never was and never will be.

Science is the most competitive? Really? Got some data for that claim? I recall a refugee of the law department to science, something about them not liking the competitive spirit that cut pages from a book so other students could not answer the question. And a look through some lists of the most competitive jobs finds absolutely no science positions. So. Where's your data that scientists are "by far the most competitive"? Or does the reality of competitive jobs not fit your narrative?

Why is entrepreneurship trending downwards? No, not the noise when one stripe of the Carbon party is in power. The trend. Or does that decline not fit your narrative?

Speaking of low oil prices, how fares Venezuela?

Meanwhile, the republican candidate has named Ken Salazar to her transition team. Yes, that textbook corporatist who favored leasing more of the gulf (after the Deepwater Horizon thing) and who has called the Keystone XL project "win-win" and who has gone on record stating "there’s not a single case where hydraulic fracking has created an environmental problem for anyone".

Anon - "Maybe instead of lambasting them you should try to communicate with them."

Treebeard - "You geeks are trying to make America into something it ain't, never was and never will be."

Oh, there is some communication going on here. Red America is saying "let us stay in charge or we'll shoot." The other 70% of the nation is resoundingly saying "NO!"

I note that having a bunch of know-nothing-and-proud-of-it-types (treebeard here moreso than our anon) declaring they want another war with the rest of America probably won't end well for the ent. Napoleon famously had a saying about God and cannons. I think a modern corollary would be something like "God fights on the side of the smartest scientists and best engineers." And the geeky domination of the means of communication doesn't bode well for the Confederates, either.

Don't piss off 70% of your nation. This time we might not listen to the better angels of our nature.

It's possible that *unanticipated* low oil prices hurts producers more than it benefits consumers (because oil producers spent a lot of money on setting up ways to extract hard-to-get oil that they now can't make their money back by selling). Also the laws of macroeconomics get weird sometimes when interest rates are near zero and aggregate demand is low; look up "paradox of thrift".

The main effect of lower oil prices has been to make fracking less valuable. If anyone reading this thinks that fracking is OK, look at earthquakes in Oklahoma and dangerously polluted water in Pennsylvania.

Anyone who denies that the Right has conducted a war on science for the last two decades is simply not paying attention or is in the deepest form of denial.

Many of us may be geeks in the eyes of Treebeard and his ilk. However, since Treebeard and his ilk are probably using some form of computer technology, witnessed by his post here, he should be on his knees thanking us. Without us geeks, Treebeard et al., would be living in an un-networked and computerless world. Those two fundamental technologies have allowed Treebeard and the rest of the Know-Nothings to stroke each other's false beliefs.

Unfortunately, the anti-intellectual strain in Anglo-Saxon culture continues to raise its ugly head. Periodically, fed by demagogues, this strain of Anglo-Saxon folly continues to haunt us. (And, by the way, I'm as WASPish as anyone can be.)

With all its benefits, one of the major flaws of Web is that it has enabled people to widen and deepen the chimneys in which all too many of us exist.

Anon(1) Of course working class people can be experts in their field. Nobody said uneducated is unintelligent.

Anon(2) The competitive process in science is to be found in peer review, where one expert pits their powers of observation and reasoning* against those of other experts to see if they are worthy of publication, and research grants. One anecdote about a departmental refugee won't cut it.

hmm... I'm not seeing how low oil and natural gas prices lures investments to the US. Low commodity prices tend to discourage investment in new sources and causes shutdowns at sites where production costs too much.

From where I'm sitting, it looks like certain oil producers are over-producing in order to drive prices lower and remove some otherwise viable competitors. I don't have an issue with this, though, because the consumer wins while the fight is underway AND local producers are tempted to innovate to lower costs. That temptation isn't a lure of investment money caused by low prices. It is more about competitive desperation. Local owners have to invest to stay in the game. That's quite healthy as far as I'm concerned.

@Dr. Brin - chiding...(1) Re flat tax - Jerry Brown is the first presidential candidate I know of to push for a flat tax in the post-WWII era,. No right-wing dogmatist there. The idea is more 'populist' than anything: the more complex the tax system, the more those who can will game it, the more it will cost to enforce it against those who game it, and the more complex it will become in response to their games. A vicious feedback loop. (Unfortunately, flat tax proponents don't know anything about global tax arbitrage - or they'd realize that even a 'simple' tax system will still be gamed.)

(2) Re Sarah Palin - How many times did Palin go bankrupt before running for office? How many ex-husbands did she have? Did she ever boast about her sexual prowess or her big boobs? Palin makes the Donster look classy (that said, she also makes him look smart, which along with her looks explains why he likes keeping her around).

"The benefits to consumers could be around $140 billion from gasoline savings...But the losses on the other side due to lower production, less investment, less build-out of infrastructure could be around that amount. So we're kind of at a wash."

Fair, and an argument made by an economist rather than a shill. It's plausible. This, however, is not - "low oil and especially natural gas prices have been luring investment in manufacturing in the United States."That's extremely unlikely. Investment into manufacturing takes years to plan and actually come on line. The fastest tech firms with the most money take a couple years from start of plan to implementation - most firms take much longer, particularly if they need to raise the money. In 2014, oil prices were at about $100/barrel - so this wouldn't have been a major part of their calculation.

Something else that is very important DID change though in 2013: TAXES. Specifically, the dividend tax rate. Most Americans missed it, since few pay the 20% tax rate on dividends, but every single person in the top 1% noted the jump because it affected their entire global system.

A 5% tweak on dividends can have an unexpectedly large effect on an investment decision. Suddenly, factories with a 5-7 year time horizon to pay off now have a 10-15 year time horizon. Factor in the uncertainties inherent in foreign manufacturing (especially Chinese government discrimination against foreign-owned firms from 2010-2014) - and between the increased likely costs of any investment into China and the decreased benefit of doing so, you've got a recipe for a substantial shift.

Nobody except the richest Americans talks about that 5% tweak to dividends. But THOSE people who are affected are infuriated. They'll stop at nothing to get us back to 2008. Well, almost nothing - they're not keen on endorsing Palin...

"The benefits to consumers could be around $140 billion from gasoline savings...But the losses on the other side due to lower production, less investment, less build-out of infrastructure could be around that amount. So we're kind of at a wash."

Argh. Mixing consumers and producers! Beware of economists who think of national income as the measure that matters. They might be thinking in terms of footraces.

@Alfred - "I'm not seeing how low oil and natural gas prices lures investments to the US."If the low prices persist for a few years, they'll probably lure certain kinds of investments into the U.S. But again, looking at the evidence (as smart people, and those like me who aspire to being smart must do) - it is implausible. The best example: Saudi Arabia has (1) a huge labor supply, (2) the lowest energy prices in the world, (3) a reasonably preferential income tax rate compared to the U.S., but still has (4) negligible investment in manufacturing (except for petrochems - which will become increasingly important with moves toward 'additive' manufacturing - where do folks think all those plastics will come from?).

"certain oil producers are over-producing in order to drive prices lower and remove some otherwise viable competitors."And this is why I continuously and vigorously challenge Dr. Brin every time he asserts a connection between the Saudi royals and the American right-wing. These people are "friends" the same way 18th century British aristocrats were 'friends' of French aristocrats: sure, they do business together, but they also start wars against each other.

"Local owners have to invest to stay in the game. That's quite healthy as far as I'm concerned."It gets unhealthy when local owners induce others to bear the risks of their errors, almost always without knowing that that is what they're doing. There's an array of ways an oligarch can shift costs that a non-oligarch cannot.

(1) Calling for military action that isn't otherwise in the national interest (e.g., "Invade Iraq! Bomb Iran!" - shift costs to soldiers and/or to other countries). A prime driver for both conquests and colonial excesses, it's somewhat rarer these days.(2) Direct and indirect government bailouts (shift costs to taxpayers).(3) Strategic bankruptcy (shift costs to banks/creditors/pension funds).(4) Strategic breach of contract (shift costs to suppliers and smaller businesses that cannot afford to fight a larger company; also how some insurers operate)(5) Long-term debt arrangements (shift costs to children and unborn generations)

I have no problem with true innovation - but cost shifting 'innovation' (which is the bulk of financial innovation, and frequently the most lucrative form of innovation) often makes me seethe with fury.

Something that may need to be done, establishment of conservative principals apart from the needs of enormous money. I'm not convinced there is enough there to stand on it's own, but balance is a desirable thing.

Anonymous your salt of the earth practical folks aw shucks appeal would have more resonance if there weren't a perfect correlation between the hatred of knowledge professions and adherence to climate denialism and a hundred other cults/

And to hypocrisy, since these folks will run to the best doctor they can find, when they are sick.''You correlate down-to-earth practical skill with confederatism and that is a flat out insult to the former, many of whom are members of skilled labor unions who have been a central target of right wing hate campaigns of two generations.

Subtract them and yes, some small business owners are still republican, I'll grant, but despite the fact that statistics show small business always doing better under democrats. Always. And I mean absolutely always. Hence, alas in that case yes, I will conclude that they are under hypnosis.

If you do conflate practical folk with confederates, then tell me one way in which red america lives better, more moral lives than the blue neighbors theyhave screamed "immoral!" at for generations, from teen sex to STDs and so on.

Feh. The knowledge professions did not start this war on smartypants. Do not whine when we get fed up.

Smart people who know a lot are smart... and know a lot. Live with it.

@Alfred - "Argh. Mixing consumers and producers! Beware of economists who think of national income as the measure that matters. They might be thinking in terms of footraces."

I did link to Dr. Arora's article on the point. If you care to critique it, I'd be interested. Mostly though, (1) his reasoning seems plausible, (2) he's not dogmatic, nor is he asserting that he is correct, only that the premise merits further exploration, and (3) he's a government official rather than selling any services.

NPR also quoted Weinberg in March 2016, whom Dr. Brin refers to - but he's also an NYU professor in international economics and a pretty experienced hand. I don't see evidence of him being a parasite; "high frequency trading" can be parasitic, but it can also serve the 'price discovery' function quite well. Like water: fundamentally necessary, but in too large a dose, it's toxic (or a flood).

"Nah, it's called brash, bold confidence, ambition, practicality, patriotism, competitiveness, living larger than life, giving the finger to convention, political correctness and dandyism, and a willingness to hustle. It's the American Way, and it's what makes America great."- Pretty much how every rapist thinks of himself, and rationalizes his crimes. And in their minds, every victim is a weakling who deserves exactly they get.

Dr.Brin,If your father wrote for Stars & Stripes back in the Big One, would that suggest that literary ability is at least partially genetic, or do you attribute it mainly to environment (or something in between)?

Anyone who denies scientists are competitive simply knows no scientists. I - in contrast - DO know lawyers and businessfolk. Feh.

One of my favorite projects in law school was a research assignment with Dr. Matthew Meselson on bioweapons. He had a panel of bright young law students volunteering, some much smarter than I, jockeying for the chance to work with him. But he liked my take on how the polio vaccine helped "win" the Cold War.

I didn't get to interact with him much, but I did get to peruse some of the work his students were working on, displayed on the walls. He was brilliant, focused, and cheerful. Competitive? Surely so. But the rules of competition, it seemed to me, were to "do science" well, not to undermine or disparage a rival, never to cheat.

Lawyers and businessmen often don't play by those rules. In that sense, they're 'more competitive' than scientists. Their position is more like the feudal era of scientists, when the profession was sponsored by feudal lords alone, all players became 'hustler-pariahs' jockeying for a court position, and the rules of competition more often rewarded 'showmanship' than rigor. That would be one of the tragic losses of a reversion to feudalism.

"Low nat gas prices HAVE spurred a huge increase in investments in at least chemical industries along the lower mississippi."

Unlikely, on account of the time from conception to execution of any major investment. Most of the biggest Baton Rouge projects were launched in 2012-2014, when oil prices were at their heights. Other investments in Mississippi (esp. Nissan/Toyota) owed more to other changes in Mississippi law to rein in extreme tort rules. Investments being planned since 2015 will factor low energy in, but most likely, the largest of those won't break ground until 2017.

All that said, the single greatest driver for manufacturing investment in America in the last 4 years has been the end of the dividend tax rates imposed by Bush, particularly once those got settled in 2012. The second largest driver remains Chinese discrimination against foreign-owned companies, which made them a far less desirable investment target recently (much as Mississippi itself was for decades).

Alfred Differ:hmm... I'm not seeing how low oil and natural gas prices lures investments to the US. Low commodity prices tend to discourage investment in new sources and causes shutdowns at sites where production costs too much.

donzel: "but it can also serve the 'price discovery' function quite well. Like water: fundamentally necessary" - sorry but I have never seen "price discovery as anyhing but a voodoo incantation to rationalize sucking value out of transactions between buyers and sellers.

Paul: My father, grandfather and brother were all Journalists… and I've done some too. No way to tell what's genetic or environment. But I did try to escape into science! More accurately -- I took writing for granted as something I could do "on the side." It happens that civilization values my side line enough to drag me - kicking and screaming - into a profession.

You wrote "The oil price plummet could have been a disaster to the planet, had it happened a year or two earlier, undercutting the rise of sustainables. But now even solar and wind power producers are fine with it, since they have reached breakeven with fossils and their ongoing, spectacular takeoff will benefit from low manufacturing overhead."

The third leg of sustainables is electric vehicles. Current low gas prices are putting off mass adoption of EVs by (at a guess) a year or two. In the U.S., the transportation sector just rose to being the top source of CO2 emissions. The cost curve for EVs is better than for Internal Combustion Engine vehicles, so it is probably just a delay. EVs are important for more than just direct transportation sector emissions, though. Batteries are the low carbon answer to peaking plants, and battery costs go down according to a typical experience curve where the cost goes down by 6 to 9% for each doubling of production.

Batteries can potentially move into load-shifting, which becomes important as renewable penetration gets very high, but it is only economical in special cases right now, which means that it doesn't significantly affect battery production, which in turn means that it doesn't drive the manufacturing cost curve.

So does this spell disaster for the planet? I don't know. Low fuel prices help the economy in general, which may make up for the slowed advancement of battery tech.-nitpicker357

Personally, I think that the current trend for electric vehicles and autonomous vehicles is sub-optimal. It's only a local maximum. But a better maximum would be disruptive in the extreme. And I don't mean mass transport, exactly. I think we'd be better off replacing the current road system with aluminum rails, and putting the autonomous vehicles on those. Much better scalability to that system. And utterly politically infeasible in the US.

I'm always reminded of a friend of mine when the subject of law school comes up. She had a masters in analytic organic chemistry prior to law school. One of her classmates had the same in some variety of engineering. They found law school neither harder nor easier than their previous graduate schooling. The rest had pre-law, history, or English degrees, and universally saw law school as very, very difficult.

Who else sees the doomer advertisements at the bottom of the page? The irony is amusing.

One problem with the anti-intellectualism is its prevalence in the professional classes! There are a lot of know-it-alls who think because they've mastered their field, their "wise instincts" are sufficient to opine on others. We all know about certain doctors who are this way; I've met electrical engineers and good structural engineers who don't accept evolution, journalists who think they know about petroleum exploration and development, etc.

For example there was a local brouhaha about a "bad" tree trimming job in which the city punished a tree-trimming company but I noted that according to a professional arborculturalist trade journal, the job was outstanding if rather new and unorthodox (it was done such that the benefit was only due to be seen several years down the road - but I digress.) The journalist was amazed that professional tree-trimmer's journals even existed. The fact is, professional journals exist for every specialty, and they know more than you do.

Note too that fields such as medical ethics and legal ethics also have more background information than the casual wheel-re-inventor dreams of - not that practitioners don't violate them sometimes, but more to the point, sometimes are perceived to be violating them when they aren't.

On the difference between competition and cheating, I guess scientists prefer the rules which minimize the cheating. Which leads me to remember to recommend the movie about Ramanujan, "The Man Who Knew Infinity."

On what America is, it is an idea, and an ideal. As far as I know it's not about doom and bitterness, Treebeard's hobbies.

@Dr. Brin - "sorry but I have never seen "price discovery as anyhing but a voodoo incantation to rationalize sucking value out of transactions between buyers and sellers."

Surely eBay, Amazon, and book publishers - all services that "suck value out of transactions between buyers and sellers" - also contribute by making a market that would not otherwise exist? (Unrelated, but I noticed Meg Whitman of eBay crossed party lines to endorse Hillary Clinton and donate to her campaign; the Bezos-owned Washington Post routinely castigates Trump).

"Current low gas prices are putting off mass adoption of EVs by (at a guess) a year or two. In the U.S."

I disagree - at the moment the limiting factor is not the demand for electric vehicles it is the manufacturingTesla had 400,000 deposits for their new car and they are selling as many S types as they can makeMore demand would not sell more cars! - Musk could increase the price to maximize profit but he is playing a long game

This is also donzelion's point about the time delay in manufacturing - it takes years to go from small scale manufacturing to large scale

@donzelion: did link to Dr. Arora's article on the point. If you care to critique it, I'd be interested.

Heh. I followed the NPR link and then did my argh. I should know better. Journalists often miss the point of technical papers. Reading just the abstract shows the author was looking at the rule of thumb for GDP impact and intended to show it was no longer valid. Makes sense.

The NPR article takes the reader in a different direction. What’s good for the economy? What’s good for us? Are they really the same thing? The article leads in the direction that says they are the same. I disagree because that direction requires us to mix the impacts to consumers and producers. Since local production can be substituted for a slew of other options, I think what’s good for us comes in different flavors.

I prefer to look at these things not in terms of GDP if we are trying to figure out what is good for the average person. Look at the price of the basket of basic needs. When the basket price goes down relative to wages, the average person will see that as a good thing. Let the GDP work out as it may.

@David: Low nat gas prices HAVE spurred a huge increase in investments in at least chemical industries along the lower Mississippi.

Ah. Investment lured to a different industry by the drop in price of one of the factors of production. That makes more sense. One substitution causes another.

I thought you were arguing for investment in a commodity industry with falling prices. My experience is the folks with money wait on the sidelines to see which competitors turn into carcasses that can be purchased cheap before the next price upswing. Vultures ARE a kind of investor, but they show up late to the party. 8)

@LarryHart: But was he incredulous at a failed prediction, or at the failure of a cheating scheme to work as planned?

Probably all of the above, but when I watched him on election night he seemed genuinely shocked by what he was learning. I would expect more anger and less shock if he knew how things were going to go. He struck me as a guy who drank his own Koolaide that night.

(Heh. Had to correct a Freudian typo that said Kookaide. May I should have left it in, but I think Rove is smarter than that.)

@donzelion: David has a thing about HF traders. He sees them more as parasites than as price finders. He has a point for the people who can insert a trade a few microseconds before mine who do so only because they know I’m about to do it. That’s leeching and since AI's are being built for this purpose, it is potentially dangerous.

What you are describing are middlemen. They are trade enablers who SHOULD charge for the service.

@Jumper: One of the things McCloskey rails about is anti-liberalism among the educated clade. At its roots, the complaint is that some of us don’t believe in evolution in the economy let alone that such a process serves the poorest. Without evolution in markets, one is left to design processes and failed analogies of the market as an engine.

In my naïve youth, I expected the educated to respect each other more than that. Pfft. In my older years, I’ve learned to see that the conflict is necessary. Some of us come up with some spectacularly bad ideas and deserve to be flogged, but I’ll settle for trade-testing battle arenas.

I’m tempted to make little stickers that say CITOKATE and put them everywhere.

I’m also tempted to make them for TTBITOKATP, but it is too unpronounceable. Time for some thesaurus work. Trade Tested Betterment Is The Only Known Antidote To Poverty.

"More demand would not sell more cars! - Musk could increase the price to maximize profit but he is playing a long game."Tesla is not the only player in this industry. They have done a very good job of entering from the high end and moving down. Demand for the Model S has been much higher than they anticipated, which means they didn't plan for high production as early as they might have. If only dozens of third parties had swooped in and stolen the market from them ... but demand wasn't high enough.I think higher gas prices would have increased demand for the Leaf, for example, and Nissan would have responded by raising prices, increasing production, and increasing engineering investment. And the race would have been on... The Model S is sufficiently expensive that lower gas costs still don't make it cheap to own, and it doesn't lose value quickly enough for me to buy one.Tesla appears to be going for a twofer: being the best EV manufacturer, with very low-maintenance cars with a low marginal cost per mile, and first to market with level 4/5 autonomous vehicle. If they can pull it off, they should own the livery trade (cabs, Uber, whatever) This could expand very rapidly, greatly reducing demand for cars. If utilization rates are high and maintenance costs are indeed low, the high acquisition cost is quickly amortized. The Model S doesn't really have low maintenance costs by normal car standards, though.nitpicker357

riatoHere is a well reasoned paper on why electric cars are not the answer and that suggests a solution similar to the one you prefer. In very brief summary, renewables are the supply side part of the equation, but the demand side is equally important.http://www.mdpi.com/1996-1073/9/9/676/html

Surely eBay, Amazon, and book publishers - all services that "suck value out of transactions between buyers and sellers" - also contribute by making a market that would not otherwise exist?

I think that it is important to look at the specifics of the 'market' in question to determine whether some entity is creating (or helping to create) that market, or merely sucking value out of it.

Your three examples are illustrative, I think.

Book publishers, for example, do create the market for books. They are necessary (though not sufficient) for the market to exist: if there were no published books, there could be no market for published books. Thus, book publishers plainly provide value. One might argue about the relevant contributions and compensations for the various participants, of course, the publishers are plainly making a contribution.

Ebay serves to enlarge a market. Certainly the market for secondhand goods, collectibles, and so forth existed before Ebay, but it was a collection of localized and/or specialized markets. So, in expanding the market, Ebay is also making a contribution.

The case of Amazon is less clear. It is not clear that Amazon provides any good or service that was not already available. At best it has made buying what it sells slightly easier or cheaper. This may be a benefit, but it certainly is not 'making' a market. And the extent to which it provides the benefit by squeezing employees and suppliers should count against the benefit.

We might also consider things like High Frequency Traders. There is a place in the stock market for "market makers": those who step in to buy or sell when trading is thin, and thus do contribute to price discovery. But this is not what HFTs do. Price discovery occurs when buyers and sellers agree on a price. Overly simplified, this works when a seller puts in an offer: "sell X at 50 or more". If a buyer appears with an offer: "buy X at 51 or less", then the trade will occur (at 50, or 51, or possibly somewhere in between, depending on the exact circumstances). What HFT does is allow someone who is properly placed to notice that there is a difference between the two and step between them, buying from the seller at 50 and selling on to the buyer at 51, then pocketing the difference. This provides no benefit to either the original buyer or seller; indeed, the original buyer, or seller, or both, lose from the participation of the middleman. Such seems to be a perfect instance of parasitic activity.

Hi Kal KallevigI've just read the paper you referenced What a lot of bollocks! - Solar Energy ROI is 2.45 - in Spain!I am on the very bottom of South Island NZ - my panels will have returned the embedded energy (including transport) in about 6 months out of a 30+ year lifetimeGiving a Solar Energy ROI of 60! - and that is NOT in Spain

A typical whining paper by somebody who does not like to see other people doing wellBasically a lot of bollocks published as a paper by somebody who does not understand what is going on

There are currently two volume electric cars on saleLeaf - 230,000 soldTesla - 125,000 sold

In both cases the manufacturer is selling all that his current factories are configured to sellThe could both increase production BUT that would require a significant (in the Billions) increase in capitalNissan is probably reluctant to do that as a lot of the increased sales would be instead of other Nissan models with higher marginsTesla is going as fast as they can (probably too fast for comfort)

Demand is simply NOT the limiting factor - YET - once Tesla has the type three in production and Nissan has a few more factories configuredAnd the other car manufacturers join in THEN demand will the limiting factor - but we are not there yet

Tesla didn't "not plan" for higher capacity - they didn't BUILD for higher capacity a different beast altogether!Its easy to plan but getting all of the hardware to build large numbers of cars is HARDEspecially when you think about all of the supply chain restrictions - it's no good being able to build 200,000 cars a year if you can only get batteries or inverters for 100,000 a year

Sigh. I simply don't understand depletion deductions, the concern being the oil industry. I sure wish someone could explain it to me. I have zero accounting knowledge, except for deducting actual expenses from actual revenue for income reporting.

"I took writing for granted as something I could do "on the side." It happens that civilization values my side line enough to drag me - kicking and screaming - into a profession."

- Now that is funny, given how well you do it. If you want to speculate on how much was nature and how much was nurture, answering a few questions could give some hints. Did you take creative writing classes, or do you feel that word-smithing just came naturally to you? It's obvious you are an avid reader, so the skills could have been absorbed subconsciously through broad experience with narrative art. Many great writers are essentially self-taught this way. To what extent did parents and grand parents discuss the craft when you were little? Of course, the big question is: do you feel like you have stories that are trying to get out of you, or do you feel like your stories are things you have cleverly crafted?

Maybe I can understand your sentiment about wanting to be a scientist but being dragged into writing - which is not to say I have experienced it myself. Rather I am thinking of another great narrative artist, the cinematographer Miyazaki Hayao. He wanted to be an artist from early on, but he did not study art in college. He majored in Poly Sci, then apprenticed in an animation studio when he was finished with college. Why? Inspiration. You can see that most clearly in "Nausicaa" where he posits a future world inspired my mycology and entomology. The drama is pure human drama, with all its socio-political underpinnings, but the setting was borne out of scientific fascination.

My older brother went the opposite route, majoring in art, but his art is superficial and uninspired, and he has not been very successful as a career. When you study art, you learn technique, but inspiration is just assumed. His only source of inspiration seems to be his anger over social injustice, but that by itself leaves him with very little interesting to say that hasn't already been said by many others for centuries. I found science to be so mentally stimulating that it has always filled me with ideas for creative projects (which I execute very badly, because I have never developed the skills - as Snoopy used to say - BLAH!) So it makes some sense to me that your attempt to escape the family profession through science - the most mentally stimulating thing in the world - led you back to around to writing.

On "Anonymous" posters, it doesn't make a lot of sense to check the anonymous box, then sign your name at the bottom, does it? "Anonymous is for the true troll, while signing your name at the bottom makes a blog post feel more like signing an old-fashioned letter, which is no doubt an artifact of myelin. We are creatures of habit.

(Heh. Had to correct a Freudian typo that said Kookaide. May I should have left it in, but I think Rove is smarter than that.)- I have to comment on this one. Being smart is not the opposite of being crazy. I have read more than a few brain researchers and/or logicians who have pointed out that being smart does not mean being right (Robert Sapolsky, Michael Sheerer, Nathan DeWall). Smart people are just better at rationalizing their kooky ideas. This is especially so when you live in a chimney where you can only see the tiny patch of the world your gaze is directed at by your social circles. A person like Carl Rove probably only ever talks to people who think exactly the same way he does, people who are as rich as he is, as shifty and self-serving as he is, as chauffeured as he is, etc. So being smart is no preventive against being a kook, and whatever Koolaide he is manufacturing/imbibing in can fairly be called Kookaide. Same goes for a whole lot of very smart people.

Someone might think that this logic would apply to science, except that scientists tend to rub elbows with a lot of other people, and not just other scientists. It surely applies to some, but the nature of both the scientific community and the kinds of people who are attracted to these professions tends to circumvent the chimney effect.

Jumper - what's the problem with using "@" to signify whom you're addressing? # strikes me as too twittery, and 'hi' strikes me as appearing friendlier, but not really being friendlier....hmmm...

hey greg - "I think that it is important to look at the specifics of the 'market' in question to determine whether some entity is creating (or helping to create) that market, or merely sucking value out of it."

Agreed. My point was to suggest that demonizing ALL the market makers is unwarranted, and there are many kinds of markets to make, and ways to make them.

I get the concerns about HFTs, and also the purported benefits (somewhat, not being a trader myself). I do not see them as 'good' or 'evil' - so much as meriting close scrutiny. I tend to fall back on Keynes:

"Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes the by-product of the activities of a casino, the job is likely to be ill-done."

And tax approaches to rein in HFTs, well, I'd wait to see how this plays out in Italy and other countries enacting substantial taxes. My expectation is that such rules will reduce trading in smaller capital entities more than larger entities; potentially, the net effect will favor investment in large caps, reducing it in small caps.

donzelion, how could you possibly mistake the fact that I am talking to you if I use your name? Why is this next example superior?"@donzelion, how could you possibly mistake the fact that I am talking to you if I use your name?"The answer is, it is not superior. It is pointless. There is no logic for it. It is an affectation, completely unnecessary in the past and completely unnecessary in the present. It is not used live in a group using speech, and it explicates nothing, adds no content, and is meaningless. The information (to whom I'm speaking) is right there in your name and zero additional information resides in the "@." Zero.

donzelionI understand your concern about demonizing market makers (and I suspect David does, as well). My point is that not all of those in the market are actually market makers, in any sense of the word. Some involved in trading (including speculators, oftentimes) are indeed providing a service. But others merely siphon a bit of value off for themselves while doing nothing of any value to anyone.

HFTs are (at least in many cases) a prime example. They are usually not even 'speculators'. Rather, as I noted before, they use their position insert themselves into trades that would take place with or without their presence, taking a cut for themselves. As I said before, this seems purely parasitical.

Paul SB:"I took writing for granted as something I could do "on the side." It happens that civilization values my side line enough to drag me - kicking and screaming - into a profession."

- Now that is funny, given how well you do it.

Some times, writing becomes a calling. I've always felt that I had the temperament of a writer, in the sense that I always wanted to have certain experiences enough times to describe them in full. As a kid, I always wanted to get to (Cubs) baseball games early enough to see the batting practice, fielding practice, field tending, etc prior to the actual game itself. It was necessary to have the whole experience and to be able to recall it.

Also, I've always wanted to see movies and read books multiple times. I now realize that I'm reading them in different ways. One to see the story unfold as intended. Another time to appreciate the nuances that one can only get when he knows what's coming. Other times just to admire the craftsmanship of the piece or the poetry of the writing. I read (or watch) as a writer as well as a reader. When I encounter bad writing, I'm always seeing how I could have done it better. When I encounter great writing, I'm amazed at the fact that someone was able to do something that I couldn't do if I lived to be a million, and am grateful that they did so.

Before wife and child, I toyed with the idea of trying to write fiction. Once I had to actually support a family, that kind of went by the wayside. The urge still comes out occasionally, though. I wrote and published a four-page comics story in a collection with some other Cerebus fans back in 2007 at a small press expo. And of course, the urge to express myself in writing here on this blog is an example of the same. Now that I speak "Hamilton", there's even a phrase for that. Why do you write like you're running out of time?

I suspect Dr Brin, like Kurt Vonnegut, felt writing to be a vocation, and was lucky/persistent/good enough to actually make a profession of it. I am envious, admiring, and grateful to have them, all at the same time.

Paul SB:Maybe I can understand your sentiment about wanting to be a scientist but being dragged into writing - which is not to say I have experienced it myself. Rather I am thinking of another great narrative artist, the cinematographer Miyazaki Hayao. He wanted to be an artist from early on, but he did not study art in college. He majored in Poly Sci, then apprenticed in an animation studio when he was finished with college. Why? Inspiration.

It's a cliche, but I believe a true one, that you can't just "learn how to write". You have to have other experiences so you have something to write about.

Paul SB:On "Anonymous" posters, it doesn't make a lot of sense to check the anonymous box, then sign your name at the bottom, does it?

I check the "Name/URL" button. I suspect many people don't realize you can do this without some sort of formal identification. You can type whatever you want in the "Name" prompt, and you don't have to use a URL. If you're intent is to be consistent with a pseudonym, that's an easy way to do it.

Paul SB:Michael Shermer, not Sheerer. I have no idea who that might be, whatever my keyboard thinks.

I see no benefit to leaving "auto-correct" enabled. Warning you about misspellings that you can choose to correct? That can be useful. But letting the keyboard decide what you're "really meaning to type" and jumping ahead of you? It's going to have to get much more accurate than it is now for me to even give it another shot.

donzelion:Jumper - what's the problem with using "@" to signify whom you're addressing? # strikes me as too twittery, and 'hi' strikes me as appearing friendlier, but not really being friendlier....hmmm...

When I'm responding to someone else's particular line, I'll usually quote the line as I just did here. When I'm just responding in general to an individual, I've gone to using "@" because that seems to be the accepted thing to do. But if it pisses you off in particular, I'll try to remember not to address you that way, just as I've gone to using bold rather than ALL CAPS for emphasis because the latter offended Tacitus2.

If anyone cares to return the favor, try not to use "irregardless". Pleeeeease? :)

Jumper:The information (to whom I'm speaking) is right there in your name and zero additional information resides in the "@." Zero.

The way you had it does look silly:

However, if I were to set off a response to you with:@Jumper

all by itself, and then start my response on the next line, the @Jumper serves as a header, proclaiming to all whose eyes scan down that "All that follows is a response to this person (although you others are welcome to listen in). It serves a similar function to "Dear Jumper" in a letter, although that construction seems a bit...weird...in this context.

A lot of this comes down to general expectations. I learned in high school grammar that the best rules are those which are not noticed in the following, but are noticed in the breaking. I'm willing to adjust my behavior to what makes sense, but there's no point in insisting that differing from you in opinion makes one stupid. Again with the Hamilton:

He looked at me like I was stupid.I'm not stupid.

Now, if you want to argue that "The information is right there in 'regardless' and zero additional information resides in the 'ir-'. Zero.", I'm right there with you. :)

Sorry to intrude on the politics, but Only Human has a fascinating update in which colonization of Mars is talked about with the colony not being something done by nation-states... but rather by investors. It's a concept occasionally done in science fiction (indeed, a number of worlds in the Honor Harrington universe were colonized due to the efforts of entrepreneurs rather than government sponsorship), and I rather liked the fact this concept was included in the comic.

It also brings up an interesting question of course. Why would investors offer to help colonize another world? Outside of Elon Musk who wants to expand humanity's footprint to other worlds, of course... but really, I see humanity spread as a result of religion or government more than corporate investments. (Corporations may very well invest in asteroid harvesting, but that's more to cut costs on raw materials.)

Anyway, it might be something interesting to consider for debate. Why WOULD investors be interested in helping pay for a human colony on another planet?

Larry,When everyone else here is engaged in heady debates on policy or economics, I can often count on you to get down to the level of human conversation, and I think you for that. I don't have the time, these days, to do all the research it would take to keep up with some of the debates we have here, but I do appreciate the personal attention.

Moving along: What you wrote about reading books and writing as an avocation/profession is a sentiment I feel as well (and the fact that I could not express it as easily and as well as you did suggests to me who has the greater potential, here). My own efforts have always suffered from what your Hamilton quote asks. I always write like I am running out of time. It's probably because I know I have a bad memory, so I try to get my ideas down as fast as possible before I forget them. Inevitably, this produces shoddy stuff in need of revision, but when I go back to revise I get stuck.

As far as the auto-correct goes, if I could find the appropriate control panel to shut the damn thing off, I would.

is a scientist, futurist and best-selling author. His novels include Earth, Existence, The Postman, and Kiln People, as well as Hugo Award winners Startide Rising and The Uplift War. The Transparent Society won a Freedom of Speech Award of the American Library Assn.